Currency as a Paper Standard

People often make a distinction between asset backed currency, (where each dollar is a claim to some physical good, such as the gold standard), and fiat currency (where each dollar is simply a government printed piece of paper).

The distinction that people generally draw is that fiat currency can be produced in arbitrarily large amounts (i.e. printing tons of paper money), while asset backed currencies limit the sovereign's wealth to his stocks of the asset in question (unless he wants to dilute the currency, by reducing the amount of gold in each coin if it's literally a commodity currency, or reducing the amount of gold that each piece of paper is claim to for an asset backed currency).

In reality, all these arrangements are arbitrary - money works because people believe other people will accept it, and the gold and paper and whatnot are just coordination mechanisms to help us agree on what to accept.

The idea that the key distinction is the ability to print more money obscures a second aspect of asset-backed currencies that was less prominent historically but is actually more relevant today - the fact that people are accepting a notional instrument as a claim to some other less convenient instrument that they would say that they value more.

With gold, it was inconvenient to actually carry it around, so people were happy to carry around convenient pieces of paper that were claims to a fixed amount of gold, as long as everybody believed that the paper system was always going to work and be accepted. Eventually people got sufficiently used to the paper that the fiction of convertability was unnecessary. The Supreme Court took it away, and people barely noticed.

The parallel today is that we have a 'paper standard'.

The real money in today's society is ones and zeros in bank accounts, in SWIFT computers, and in Federal Reserve bank deposits.

Just like the gold standard before it, people are happy to transact in this fully abstract money because each digital dollar is a notional claim to a piece of paper printed by the US treasury. You can go to the bank and redeem your digital dollars for paper dollars whenever you want.

In the modern world, the digital dollar is vastly more convenient than the paper dollar, just as the paper dollar was more convenient than the gold bar. And while people do still withdraw dollars for some purposes, it's becoming increasingly rare. Can you imagine someone actually taking all their wealth out of the bank and leaving it in dollars under the mattress? The vast majority of the cash holdings for the vast majority of people are already in digital form.

At the moment though, people still like the fiction that they might convert all their digital dollars to paper dollars. If things were entirely on computers, what would happen if the computers crashed?

In reality, that ship sailed decades ago. If the computers crashed, the rich would be left with their houses and that's about it. But most people don't worry about this, just like most people in the 90s in America didn't worry about the government printing zillions of paper dollars, even though people in 1800 would have viewed this insouciance as insane naivete.

It seems likely that eventually the fig leaf of paper convertability will be removed. Young people already would be comfortable with this - they barely use cash, it's all credit cards. Eventually, the anachronism of paper money will be removed altogether.

When that happens, it will raise a number of intriguing economic possibilities.

The biggest of these is that there will no longer be any binding zero lower bound on interest rates. The biggest obstacle to negative interest rates is that people have the option of just hanging onto their dollars and earning zero. When the dollars are only in the bank, that's trivial to change. Every dollar in your account is depreciating at a continuously compounded interest rate equal to 3% per year.

If you could do that, the 2008 recession might have been a damn lot shorter. You don't want to spend and are trying to deleverage and hoard liquid assets? Does your answer change if those liquid assets are earning you -8% a year? Hell, even a Porsche doesn't depreciate much more than that - why not just enjoy the car instead? Hey presto, spending is back.

Don't get me wrong, there will likely be a huge psychological obstacle to negative interest rates. People will view it as the government or the bank taking their money (in a way that they don't view it as the government giving them money with positive interest rates). If the fed wants to do it, there's not much choice though - where are you going to take your money instead when there's no paper to redeem it for? If probably would fuel asset inflation, as people rush to put their assets into anything that will hold its value.

In addition, the difference between fiscal and monetary policy becomes much harder for the average person to see. If the government is taking out 1% per month from your account, does it really matter whether that amount is getting transferred to the government's account (under a tax) or destroyed altogether (under a negative interest rate)?

The eventual disappearance of paper money seems like it will only be forestalled by civilisational collapse or a massive change of governing arrangements. When the first government has the balls to announce negative nominal interest rates is another question.

I suspect that you and I may well live to see this reality.

Miscellaneous Joy

-Things that make me want to learn computer science - a visual depiction of different sorting algorithms




-Genius!



-An awesome SMBC on Evolution. Comedy gold!

-In the annals of redneck engineering, Terminal Cornucopia documents all the ways you can make improvised weapons out of items you buy inside airport security. Several of them seem to involve dismembering a lithium battery, exposing it to water to create a heat source, and then having that explode a deodorant can. My favorite is the Blunderbussiness Class, although they gloss over the fact that the video suggests that if you were actually holding it when it fired you'd get your hand blown off.

-An excellent War Nerd column on the Congo. His thesis that the western intelligentsia simply hates the Tutsis seems ex ante implausible (I can't believe most people in the west even know who was killing whom in the genocide), but it seems strangely parsimonious as an explanation of what they actually do. Click it now, because it's only available for 48 hours!

The Benefits of Having Smoked

Back when I was in high school, it seemed important to do something cool to get rid of my nerd image. In the fertile logic of the teenage mind, the obvious answer was to take up smoking. My older sister smoked at the time, so clearly this was a good decision.

None of my friends were interested in joining, and lacking any social aspect it was never particularly enjoyable. This was especially so given that I never really liked it much - I enjoyed blowing smoke (The Couch: You still do, actually), especially smoke rings, but the actual inhalation part was never that pleasant. So the whole process went as follows:  *puff*...This is so stupid ...*drag*... *puff*... This is probably giving me cancer... etc.

As you can imagine, this phase lasted about 3 months before the absurdity finally became too much - I had to not smoke for a week on a chemistry trip (yes, really), and I never bothered restarting when I came back.

Let's take it as given that I'm deeply glad that I gave up when I did.

Yet strangely enough, I'm actually glad that I smoked a little bit. And the reason is that it left me with a vague appreciation for the smell of cigarette smoke. I find it somewhat pleasant. Not in every situation, of course, and definitely not when you smell it on your clothes after a night out at a smoking venue. But if I walk past someone who is smoking, it doesn't cause me any discomfort, and sometimes smells quite nice.

I never used to have this feeling before I smoked - I just had the classic non-smoker's reaction of instant revulsion. 3 months, however, is sufficient to give you an appreciation for it.

Which is nice, because in life you're going to come across people smoking, and it's a relief to not be bothered by it. Otherwise you might end up like one of those unbearable busybodies, noisily complaining every time someone nearby is smoking. "Can you please not smoke around my child?", you'll hear them ask. I always thought an appropriate response would be "Well, I was here first, lady. Can you please not disrupt my smoking break with your bratty child?"

If you want to see how much the anti-smoking brigade has descended into a joyless, liberal scolding parody of itself, look at the reaction to e-cigarettes. They're basically a cigarette that doesn't cause the vast majority of the nasty health side effects. So celebrate! Except the anti-smoking brigade doesn't. Because, you know, kids might start smoking e-cigarettes, and then decide that they really want cancer as well as nicotine and so now start on the real thing. Despite the fact that the vast majority of substitution is likely to be away from real smoking towards e-cigarettes, not away from nothing towards e-cigarettes (as Slate Star Codex pointed out ).

I find myself siding with the smokers most of the time. The world would be better off if fewer people smoked, but most of the anti-smoking movement is just status signalling against a dis-favored group.

The fastest way to irritate anti-smoking types is to tell them "I'm a big supporter of taxes on cigarettes, because they're a heavily regressive tax. Not only is it the same dollar amount per pack for rich and poor, but since poor people smoke more than rich people, we're clawing more money out of the poor. Which I like, because our tax system is far too progressive."

Keeping Calm and Carrying On

How might brands work if there's no intellectual property protection?

Ordinarily, it's hard to know. Most works are protected by copyright restrictions until long after they've lost all interest to the public. That means that by the time you can replicate them and make parody versions of them, nobody's much interested.

An unusual thing happened though with the 'Keep Calm and Carry On' posters. They were made by the Ministry of Information in Britain in 1939 and not actually released to the public at the time. But they only reached commercial success starting in 2000 when a couple in Britain who'd purchased one of the original posters started making copies.

I would have guessed based on my crude reading of what the internet tells me about UK copyright law, as an anonymous work the copyright extends for 50 years after being made available to the public. So by 1989 anybody could make versions of it. Life is never that simple, of course, and as sure as we live in an overlawyered society, some clowns have tried to trademark it, failing in the UK but succeeding elsewhere.

Still, the relatively opaque ownership has made it relatively easy for parody versions to spring up everywhere. 'Keep calm and X Y' is now ubiquitous, for various values of X and Y - Party On, Fight On, Huck On, Chive on (?!), whatever takes people's fancy.

On the one hand, there's a tragedy of the commons effect going on - the life span of the design will surely be shortened as it becomes almost a meme. Everyone overuses it for their lame jokes until it becomes a cliche.

But on the flip side, there are lots of different creative interpretations. Moreover, the design ends up being way more widespread as a result, at least for a shorter period of time.

It's the difference, in other words, between a gold mine where Rio Tinto owns the land, and a Gold Rush on public land where everyone descends to mine the obvious bits as quickly as possible.

You may think that a massive short term exploitation of an idea is undesirable, but you don't even know the half of what undesirable is. Undesirable is the Disney Corporation successfully lobbying Congress to get endless copyright extensions passed so that their damn Steamboat Willie cartoon never passes into the public domain, thereby ensuring that no book written after 1926 will ever pass into the public domain in the US. Man, !#$% Disney. I struggle to keep calm when reflecting on rent-seeking that egregious.

My instinct is to nearly always make copyright terms shorter. When a good is non-rival, copying it is, at a first-approximation, nearly always welfare increasing. If there's a big societal gain that we could be securing by making the distribution of versions of  'Keep Calm and Carry On' restricted to the discretion of its original designers, I can't honestly see what it is.

Irony

The Mask




The face behind the mask:

"Excess ain't rebellion,
You're drinking what they're selling.
Your self-destruction doesn't hurt them.
Your chaos won't convert them.
They're so happy to rebuild it.
You'll never really kill it."

Cake, Rock and Roll Lifestyle

Blagh

You know how sometimes you just don't seem to have any anything to contribute? I mean, I'd seen these billboards about 'No Kill Los Angeles', trying to eliminate animals being killed in shelters. The name and the billboard made it sound like one of those magic lefty schemes whereby people just mandate that some action can't happen any more without any idea how to make that happen or who's going to pay for it. Killing shelter animals is now illegal! That means that shelter animals won't be put down, but will just be fed endlessly and housed indefinitely with all of the money that we don't have. So... they'll starve to death but won't be killed? They'll be left on the streets?

But no, it turns out that, despite their name, No Kill Los Angeles actually seems jolly reasonable and are just trying to encourage people to donate money and adopt out shelter animals and spay and neuter pets. Don't you want that to happen, you monster? And then I started to feel mean and cynical for wanting to hack on them just to write a blog post about lefty naivete. Lord knows there's enough of that going around, but none of it seems interesting enough to write about. Government spends $160m to make a website that doesn't work! Nobody saw that coming!

Meanwhile, as I started to write this post I began to feel vaguely guilty that all I thought of when I saw their poster was leftist politics, but the actual fact of animals dying didn't rouse me at all. So then I felt I owed NKLA ten bucks as a cosmic apology, but they very cleverly set the minimum suggested donation button at 25, and now I'd feel too cheap if I checked the 'other' radio button and put in 10. Well played, NKLA. It's a classic Paul Newman in the Hustler maneuvre - act clueless until they've raised the stakes, then BAM!, they're getting taken for all they're worth. So now this has turned into a $25 blog post, and when you divide this by my five readers, each one of you had damn well better be getting $5 of enjoyment right now or this morning is going to turn into a total writeoff.

So, yeah, that's me. In the mean time, here's some great stuff taken from Morlock Publishing's twitter feed 

-The two types of Grad School Barbie

and

-Wondermark on who can punch harder

The war on dying is going poorly, but at least the war on "dying" is succeeding.

We live in an age where people go to enormous lengths to not contemplate mortality – either their own, or anyone else’s, really.

In the current present tense culture, people don’t even realise how much this shift has occurred. Today's moral fashions are not only correct, but self-evidently so. This mindset is imbibed so deeply, in fact, that most people don't even find it necessary to contemplate why things weren't always the way they are now. To the extent that other cultures and periods felt differently, the aberration is all on their side. The past is a foreign country, all right. And people's attitudes towards it resemble those they hold to real life foreign countries: namely, we'd rather read the latest news about Miley Cyrus than give a rat's @$$ what's going on there or why.

But every now and again, subtle language choices creep in to remind us how recently the current attitudes came about.

Take, for instance, the use of the present participle verb form ‘dying’.

It used to be common to say that an old person was ‘dying’. This would refer to known terminal illnesses (‘Dad is dying of cancer’), as well as people just in very poor health and probably going to eventually lose out to something or other. To the extent that it wasn’t known exactly when things would happen, sometimes there was uncertainty (‘I think he’s dying’).

Now, to apply the term to someone with a serious illness but not currently on life support is sufficiently rare that it sounds jarring, even anachronistic. Which is ironic, because death sure ain't getting any more anachronistic. (The disappearance of the concept of 'dying of old age' is highly related).

People will still use the phrase occasionally, of course. But usually only at the absolute last possible moment when it's absolutely clear that nothing can be done. The medical profession aids and abets this view, not wanting to deliver bad news any earlier than necessary, focusing instead just on the treatment options.

The part that stands out today is just how far away from the moment of death people used to be willing to make this observation (months, typically), and how matter of fact the whole thing was. Certainly in the case of terminal diseases, where the end result was known. The only time I’ve read this expression used in any sort of recent memory was the opening sentence of Mencius Moldbug’s pre-death eulogy to Larry Auster:

In case you haven't heard, Larry is dying.

Not coincidentally, Moldbug has perhaps the strongest sense of historical perspective of almost any writer around today. The second most honest description was from John Derbyshire. Make from this what you will.

The reason nobody uses the word any more, I suspect, is that people will do everything in their power to deny the possibility of death until the last minute, when the Titanic is already half-submerged and the orchestra has fallen into the ocean. We can fight this thing! The cancer has metastasized, but they're trying a new treatment! There's still a chance!

I would wager that there are plenty of people who will never be willing to use the word 'dying' to refer to a loved one. Dad is never dying, he's just going along, right up until he's 'dead'. That bit they'll acknowledge, if only for the absurdity of the alternative. To highlight the Nelsonian artificality of all this, doctors and nurses have very little difficulty telling when a patient is nearing the end - that's how they know to tell you to call the relatives. I have little doubt that if you asked them three months ahead of time, they'd be able to give similarly accurate prognoses, but nobody ever does ask them.

The only circumstances where modern man will rouse himself to use the present participle form are in metaphorical circumstances that have nothing to do with mortality. So Mum may be 'dying of boredom', 'dying of laughter', 'dying of embarrassment', but she's never just 'dying'.

This online diary has an entire label dedicated to 'mortality'. I have no doubt that in the scheme of modern society, this makes me morbid and weird. 

I maintain, however, that the strangeness is not mine, but today's world.

Nevertheless, it ends.

Disappointment

They made a movie called Don John? At last! Someone else read the Chesterton poem and thought it was as awesome as I did, and wanted to make a movie about the Battle of Lepanto. Gun upon gun, ha! ha! Gun upon gun, hurrah! Don John of Austria, Has loosed the cannonade! This is going to be AMAZING!!!

Wait, what? It's instead a movie where Joseph Gordon-Levitt plays a sex addict?

God damn it. Never mind.

Dropping the Mask on Invasive TV Screens

The surest sign cementing my status as a curmudgeon is my annoyance at the creeping spread of TV screens into places that didn't have them before. It was bad enough when they started introducing them into taxis - they would turn on automatically, blaring worthless nonsense at you, and you had to turn them off manually.

But the world has continued to find fresh ways to vex me, the latest being TV screens at petrol pumps. There's no way to turn them off. They're just blaring at you, volume high through tinny computer speakers. Given that the clientele of a petrol station includes nearly all of society, it would be a tough challenge for a well-meaning program director to come up with content that would be interesting to most viewers, given they're only going to be watching it for 3 minutes or so. Whatever you put is likely to be annoying to a lot of people.

Oh well, can't win, don't try! The obvious response is to just make the programming almost non-stop ads. Because that's what you want when filling up your car - a TV screen tuned totally to ads. Every now and again, some crappy 7 second football clip will be displayed, then it's back to finding out about some new snack product. The ratio of advertising to actual content is perhaps higher than any other medium I've come across. The same holds true for the world's crappiest radio station, the 'Gas Station Radio Network'. (Ugh).

This whole phenomenon reminds me of the worst websites, which automatically start playing a video clip or ad, and you have to hunt around to find what's making the noise. Except here there's no way to turn it off.

There is simply no pretense that this is something customers are meant to enjoy, unless these people are complete fools. Or I'm falling victim to the false consensus effect, which is always possible, and the world is actually full of people finding fulfillment in the Gas Station Radio Network. Hey, did you know they sell cheeseburgers here?

I can't tell which possibility is more depressing.

/rant.

Bravo, Mr Fama!

So Eugene Fama was finally awarded the Nobel Prize in Economics, along with Lars Hansen and Robert Shiller. All of them are thoroughly deserving. I suspect in part that the committee might have felt like a parent finally caving to their child's demand for chocolate - it was easier to give Fama the prize than keep dealing with the implicit mockery when his name topped the list of prospective prize winners year after year after year.

I've written about the excellence of Mr Fama before. What I will note, however, is the interesting nature of the prize. It was awarded to the three economists for "for their empirical analysis of asset prices". Both Hansen and Shiller did their most famous work in this area - the Generalized Method of Moments in the case of Hansen, and the excess volatility of prices with respect to dividends in the case of Shiller.

But curiously, Fama's most famous work is developing the idea of market efficiency - that an efficient capital market is one where prices fully reflect all available information. This can work at several levels - weak form, which covers all past price and volume information, semi-strong form, which covers all public information, and strong form, which covers all information, both public and private.

Simple, right? But people hadn't thought about it in that way.

Market Efficiency was a Nobel Prize worthy insight. More importantly, it was a Nobel Prize worthy insight even if markets are not, in fact, efficient. This is because the concept of market efficiency crucially changed the way the debate was framed and the evidence understood. The people that bang on about how markets obviously aren't efficient because of the 87 crash, or the financial crisis, or whatever, still implicitly accept the framework that Fama laid down. It is very difficult to conceive of what asset pricing would look like without Fama.

Of course, people confuse the real contribution of market efficiency with the related point that markets are actually mostly efficient (which Fama has made statements in support of, though by no means universally or dogmatically). But this is the secondary part - the real genius is the idea, regardless of whether efficiency is 'true' or not. The better way of phrasing the question is how efficient markets are, rather than the boo-hiss pantomime of 'all efficient' or 'all inefficient'.

If you come up with a brilliant idea simple enough for people to understand, they'll dismiss it as obviously wrong and unimportant. If you're like Lars Hansen and do something totally brilliant that nobody outside economics will ever understand the importance of, people will assume that your reputation is deserved.

And hence they didn't give Fama the prize for market efficiency directly - they gave it for his body of work on empirical asset pricing. Which is fair enough, as it gets to the main point. By including Shiller, they also added someone whose work tends to suggest that markets may not be efficient, although again by performing novel tests to examine this question. Don't get me wrong, Shiller is a totally deserving recipient. But it still seems to me that Fama's work is the most central of the three, in the same way that Leonid Hurwicz was arguably the most central in the mechanism design prize of 2007. It seems like the addition of a behavioral person in the empirical asset pricing prize was partly a way of saying that the committee doesn't necessarily think markets are efficient (a totally fair opinion), and also, along with the prize label, to insulate themselves somewhat against clowns who misunderstand the importance of market efficiency.

Still, this is all by the by. A great day for Chicago.

It's been a while since anyone has been inducted into the Shylock Holmes Order of Guys Who Kick Some Serious Ass, but Eugene Fama is most deserving of the honour. Congratulations! Apparently some guys in Sweden rate your work too, but that's not so important.

Odd Hedges Against Modern Worst-Case Scenarios

File this one under “it’s probably still a bad idea, but it’s not clear exactly why”.

The idea of a hedge is to take steps that are (typically) costly today in order to get better payouts in bad states of the world. Unemployment insurance and health insurance are classic ones, well understood by most people.

But there are plenty of other disasters in life that people don’t think much about how to hedge.

There are, for instance, plenty of possible states of the world where civil society breaks down altogether. Frankly, the best argument for gun ownership is for the eventuality of some extended civil emergency where government disappears for weeks or months on end. If the police aren’t coming to save you any more, you’ll probably wish you’d bought that shotgun. And antibiotics. And water. Lots and lots of water. You’re laughing at the preppers now, but that’s to be expected – until the disaster comes, they’re the weirdos buying insurance that never pays out.

The most unorthodox life hedge that I’ve been musing about (only in abstract terms, of course) is that of faking low level symptoms of mental illness. Go to a doctor, and complain that you’ve been hearing voices. They’re not saying alarming or violent things, just other voices in your head. When you get referred to a psych, they can disappear. Maybe they come up again in a few years. Or if you’re worried about appearing crazy, complain about chronic sleepwalking and other dissociative states. 

What, you’re probably wondering, is this a hedge for?

Credibly establishing an insanity defense if you’re charged with a serious crime, particularly a capital crime.

Courts have a good ability to sniff out people who are bogusly claiming insanity to get out of prison sentences. It’s no good to just claim after the fact that you were mad. But if there’s a paper trail of psych evaluations starting several years earlier, it becomes much easier to run an insanity defense.

Obviously, as any good lawyer will tell you (and as I've written about before), you generally don’t want to plead insanity, since this means getting locked up in a psych ward forever, which may or may not be better than getting locked up in prison forever. It probably is better than the chair, though.

That’s where sleepwalking comes in. Some jurisdictions will accept various dissociative states (like sleepwalking, being concussed, that kind of thing) as indicating a lack of intent, but not indicating enough craziness to get you institutionalised. I don’t know how likely this is to work, but it’s a possibility.

Of course, the down side is that you will have a medical history of mental illness, which might cause all sorts of problems I don't understand. That said, for better or worse (and it's often for worse), modern society is reluctant to forcibly institutionalise mentally ill people who haven't committed a crime and aren't an immediate threat to other people's safety, so I don't know how big the costs of being diagnosed as schizophrenic would actually be. Of course, after you're charged, all bets are off.

These actions fulfill the big point of the hedge – if you find yourself being charged with a capital crime, you may well wish you’d done it. I personally doubt this will ever happen to me, so the chance of it paying off is low, and the potential other costs of being diagnosed as mentally ill are large. So it’s probably a bad idea. Plus, I don't want to lie in general, let alone commit fraud, so I wouldn't be doing it in any case. But it’s still interesting to think about.

Only a hobo, but one more is gone

The massive fire engine drove past me down the narrow street, sirens wailing, and turned down towards the parking lot next to the beach. 'Typical', I thought to myself. 'This city is massively oversupplied with emergency fire services, so they get dispatched for every little nothing. Perhaps the sand is on fire?' As I walked towards the beach, I saw a lifeguard 4WD racing across the sand to the site of the conflagration, where a few other emergency vehicles were already gathered.

It soon became apparent that, oversupplied though they may be, this was no false alarm. A crowd was gathered around at a distance of perhaps 10m, circling a crowd of several lifeguards and a couple of fire department paramedics. The emergency services workers appeared to be huddled over a figure, partly concealed by a small concrete wall.

The first sign that something was seriously awry was the bobbing motion of one of the lifeguards as he performed CPR. I stood and watched for a minute or two, and the CPR continued. I'm no medical expert, but I know enough to know than when they have to perform CPR on you for several minutes straight, this is a Very Bad Sign. We were far enough from the water that this didn't look like a drowning situation. Eventually, curiosity got the better of me, and I sidled around until I could get a look at unfortunate subject of everyone's attention. Was it an old person, perhaps, having a heart attack? As I got closer, eventually I saw that it was a youngish man, perhaps in his 30s, with shaggy hair and short beard. His shirt had been removed, and he looked somewhat haggard - I thought I could see the outline of his rib cage, and he was wearing some shapeless khaki pants. I got embarrassed from staring too intently, and I shied away to a greater distance.

I started going through the possibilities in my head, and they looked grim. No obvious friends or relatives around, as the only people close by were the emergency services guys. Add in the disheveled clothes and the fact that he was getting CPR while looking young, and it seemed very likely he was homeless. Possibly overdosed, possibly drank himself comatose. Given they were administering CPR, he obviously had no pulse now, and probably had none when they arrived. To make matters worse, a homeless guy on his own lying on the sidewalk without a pulse could lie there for quite a long time without attracting attention. People would likely just presume he was sleeping, or drunk, or passed out.

Minutes passed, and the CPR continued. By this point, I was beginning to suspect that the man was simply dead, and the CPR was mostly a hail mary, a vain prayer to deaf heaven. The main ambulance arrived, and the paramedics brought the stretcher. My worries were supported by the fact that, even though the lifeguards were still performing CPR, the ambulance workers didn't seem to be showing a sense of urgency in their motions. I kept watch to see if they were going to get a defibrillator out, but they didn't. I remember reading once that, contrary to how it's often portrayed in the movies, CPR doesn't generally restart your heart. It's just a stopgap measure to prevent brain death from lack of oxygen until they can get a defibrillator. Perhaps they were going to do it in the ambulance. But it didn't look good.

Eventually, they placed the man onto the wheeled stretcher, and rolled him to the ambulance. The lifeguard was still performing CPR, but it looked to me more and more like defiant optimism against the rapidly diminishing odds. Those with the most experience of death, the fire paramedics and ambulance paramedics, moved slowly and somberly. It was only the lifeguards still working feverishly.

More power to them, of course. If you stop it, he's dead for sure, and the ambulance is surely better supplied with things to revive pulseless patients. But it seemed like the CPR was partly for the crowd. It was the physical manifestation of the vain hope that his heart might somehow restart. It let all but the more medically minded folks believe that what they were witnessing was merely a medical emergency, rather than a death scene.

I have lived over three decades on this planet, and had never seen a dead body before today. This kind of situation is inconceivable in almost any other period of human history. You leave in an ambulance as a man with a medical condition. You arrive in the hospital as a corpse, taken in the back entrance. Death is shielded from our sight altogether, unless you happen to be there at the end for a loved one. Otherwise, the acknowledgement of how we all end might be the ghost haunting the feast. Hence the charade. Exeunt, pursued by an ambulance. Even when you suspect that the person is dead, the flurry of last ditch treatment serves to maintain the fig leaf that maybe the person wasn't really dead - that maybe death can be warded off indefinitely, and our days will always be in the sun.

The ambulance pulled away up the hill, sirens blaring but driving carefully, and the crowd started to disperse. The show was over. I wandered down to the beach, and bodysurfed in the waves with my thoughts as company. I walked back up the hill, and passed the spot where the scene had occurred. Nothing beside remained. The bustle of the boardwalk continued, as if the man had never been there at all.

Does it take much of a man to see his whole life go down
To look up on the world from a hole in the ground
To wait for your future like a horse that’s gone lame
To lie in the gutter and die with no name?

Only a hobo, but one more is gone
Leavin’ nobody to sing his sad song
Leavin’ nobody to carry him home
Only a hobo, but one more is gone

I come here not to bury the Silk Road, but to praise it.

Two days ago, the Feds finally shut down the Silk Road, the online marketplace for drugs, guns, hitmen and other miscellaneous highly illegal items. They arrested a man, Ross William Ulbricht, alleged to be the founder of the site. He went under the alias 'The Dread Pirate Roberts'. This name is taken from the movie 'The Princess Bride', and is actually a pretty excellent alias given the nature of his work:

A pirate of near-mythical reputation, the Dread Pirate Roberts is feared across the seven seas for his ruthlessness and swordfighting prowess, and is well known for taking no prisoners.

It is revealed during the course of the story that Roberts is not one man, but a series of individuals who periodically pass the name and reputation to a chosen successor. Everyone except the successor and the former Roberts is then released at a convenient port, and a new crew is hired. The former Roberts stays aboard as first mate, referring to his successor as "Captain Roberts", and thereby establishing the new Roberts' persona. After the crew is convinced, the former Roberts leaves the ship and retires on his earnings.

If you believe the allegations about Ulbricht contained in the various affadivits, he is (to quote Stephen Hawking's memorable description of Sir Isaac Newton), by all accounts, not a pleasant man. He allegedly tried to organize not one but two attempted murders - first of a former employee that was likely to squeal to the FBI, and second of a person trying to blackmail him by threatening to release information about Silk Road drug suppliers.

(As a side note, the latter reminds me of the Morgan Freeman quip in The Dark Knight):

Let me get this straight. You think that your client, one of the wealthiest, most powerful men in the world, is secretly a vigilante who spends his nights beating criminals to a pulp with his bare hands; and your plan, is to blackmail this person? Good luck.

So it's not hard to see what's ugly and destructive about the Silk Road. Having never been interested in purchasing drugs, murder-for-hire services, guns, or anything else on the site, I had no interest in its continuation. To the extent that the world would be better off with fewer murders and illegal guns (and probably with fewer drugs as well), it's a good thing that it's gone.

But let's just pause for a moment and appreciate what a truly astonishing feat of engineering and business the Dread Pirate Roberts was able to pull off. 

This was a website that let you buy drugs off the internet and ship them to your house via the postal service. 

It did this with remarkable success, facilitating more than a million transactions between strangers. Estimates of its revenues are as high as $1.2 billion, with commissions of almost $80 million.

That's a pretty darn serious business operation right there. How many celebrated startups ever generate revenues of $1.2 billion in their first two years? Or ever?

And think about the constraints the business was operating under. 

As I wrote about in March, anonymous drug sales over the internet have perhaps the steepest challenges of information asymmetry and moral hazard of any market I can imagine. How do you stop people shipping grass clippings instead of marijuana? Or ensure that customers pay when shipments may not arrive? Or convince people to give out their postal address to strangers when ordering drugs online, not knowing whether they're sending it to a federal agent?

Here's a great essay on how they managed to solve these problems. But suffice to say, it's pretty impressive. 

This is also a business that's going to be incredibly difficult to get off the ground in the first place. Suppose you're the chief of marketing for an online drugs site. How exactly are you going to run your campaign? You can't call up Saatchi and Saatchi and arrange a billboard campaign paid from the company checking account. And who do you even contact for customer and supplier outreach? Drug sellers are somewhat cagey about putting their email addresses up to be contacted. Even if the idea of an online drug marketplace seems feasible once it's already going, it would be a nightmare trying to get it started.

What about other challenges from the business environment? If you're creating your hypothetical startup, making the AirBnB of self storage, or the Dropbox of the pets world or whatever, you might get competitors trying to undercut you, or unpredictable shifts in the regulatory environment that make it hard to compete. 

Here, you have every law enforcement agency in the world furious at your existence, sparing no expense to try to hunt you down. You need to run the entire business while being completely anonymous. Remember, this whole site was operating within plain sight of the FBI for over two years. Charles Schumer complained about it back in June 2011. The continued existence of the Silk Road was a massive embarrassment to the US Government, and hell hath no fury like the US Government scorned.

I'll say this - you don't need to like drugs at all to recognise that the Dread Pirate Roberts was a God damn genius. I wish he'd turned his efforts to something more socially useful than selling drugs online. But be that as it may, the Silk Road is one of the most remarkable startup stories in the history of the internet.

(previous Silk Road discussion here)

Oh Noz! OMG!

Apparently the USDA website is shut down due to the government funding crisis.

This prompts two responses from me:

1. Oh no! How will we ever possibly survive without whatever the hell it is the USDA website is meant to do. It will seriously impact the ability of the USDA to deliver key services in...er...um...

2. These people apparently have such a low opinion of your intelligence that they think you aren't aware that it doesn't actually cost any money to leave a web page in the same state it was in. Quite the contrary - it costs money to change the web page. If the web server were shut down due to lack of money, you wouldn't get any page at all.

I can scarcely think of a better advertisement for firing everybody who signed off on this absurd stunt. Or, you know, just fire the whole USDA. Be honest, do you even know what these clowns do? Have you noticed the lack of services from them in your life recently? If US farmers stopped making milk, I wager you'd notice that pretty quickly. If the USDA stopped interfering in this process, it's far less obvious that you'd miss it.

Thanks to Hector Lopez for the pointer.

Time-Inconsistent Male Hairstyle Preferences

In the world of male hairstyles, hair length functions something like a cross between mercury poisoning and a syphilis infection. Initially you have a small amount of hair, and you periodically treat the problem with scissors, as applied by a trained expert. You look around at the madmen in their ponytails, appearing like an obscene cross between the crying game and a manga appreciation society. "Ha!", you think. "I'll never look like those fools". And you don't. The hair keeps getting cut, the antibiotics get ingested, the madness is kept at bay, and everything goes on as normal.

But then some time in college, you get lazy and don't take your medicine. You start looking at your shaggy mop in the mirror, and the madness slowly takes hold. "Hey", you now reflect, "this actually looks pretty good! Luxuriant, even. Maybe I'll just let it grow for a while". What you don't count on is the fact that the hair itself is poisoning your ability to recognise what a clown you look like.

This is evidenced by the fact that more and more alarming warnings get completely ignored. Suddenly you need to wear a visor all the time to keep it out of your face. Next you're thinking of buying a headband. Finally, when none of that works, you convince yourself  that it would actually look good to have a full on pony tail. Chicks dig it, yo!

At this point, you have become the madman who doesn't realise he's gone mad. Friends and family gingerly try to intervene, but know it's a lost cause. They just have to wait until one day, you get sick of it and finally get a haircut.

And then, the mysterious cycle completes, in that within a few days you get used to it being short again. And after about a month or so, you look back on the long haired photos and reflect, "Wow, that really did look awful. I wonder why I let it grow for so long? I won't do that again".

But you might, reader. Like all time inconsistent preferences, when not poisoned by mercury you will struggle to forecast how you'll feel when in the throes of madness.

Shining, flickering into that good night

From 30,000 feet in the air, the early evening displays a curious inversion of light. The ground beneath me is a dark purplish grey. I sometimes strain my eyes to try to make out any possible distinct shapes, but the earth does not divulge its secrets. If not for my trust in where the plane is taking me, it would be difficult to tell if I were even above ground or water. But the sky is still clinging to light, as the plane chases the dying embers of the sunset all the way towards the Pacific. The cloud bank that hugs the horizon is rimmed in a thin atmosphere of orange, which slowly leaks to pale blue, then dark blue, then black. Jupiter beckons above.

And then, every so often, the inky  void below is disturbed. A tiny defiant outpost of light appears, absurdly huddled against the black satin all around. Like some strange lichen pattern, a few lines can be made out against the indistinct mass of faint illumination. The edges are fuzzy, and a few single points of light have ventured out further, like scouts into the unknown.

Not yet, the lights call out. The universe may not care whether we are snuffed out or not. But for today, here lives Man. Today, generations rise and fall, struggling to subdue this rock of ours. But our children’s children may one day conquer the stars.

"It may be that the gulfs will wash us down:

It may be we shall touch the Happy Isles,

And see the great Achilles, whom we knew.

Tho' much is taken, much abides; and tho'

We are not now that strength which in old days

Moved earth and heaven, that which we are, we are;

One equal temper of heroic hearts,

Made weak by time and fate, but strong in will

To strive, to seek, to find, and not to yield."

The History You Don't Know

I was having a discussion with Athenios the other day about the Byzantine Empire. Apparently this is a big part of the curriculum at Greek schools. And for someone who tends to think of themselves as fairly well-versed in history (The Cheap Seats: Really? You think that about yourself? We never noticed!) it became hilariously apparent that I know next to nothing about the Byzantine Empire. It was the continuation of the Eastern Roman Empire after the split, and eventually conquered by the Turks. Anything else? Anything at all?

I suspect I'm not alone in this. In fact, it got me thinking of what a parody version of history would look like if constructed only from the knowledge of a decently educated citizen of a British Commonwealth country. I suspect it would look a little like this:

a) Before 500BC - Nothing.

b) ~500BC - Ancient Greece, Democracy in Athens, maybe the Peloponnesian  War

c) Some time after 500 B.C. (Origins mysterious) -> 400 A.D.ish  -  Roman Empire

d) 400 A.D. ish - Fall of Rome to the Goths

e) 400.A.D. -> 1066  - ????  Mysterious Dark Ages @#$%, nothing much going on

f) 1066 - Battle of Hastings, Norman Invasion of Britain

g) 1066 - 1500ish - ????  More mysterious Dark Ages nonsense

h) 1500ish - Renaissance in Italy

i) 1600ish - Britain appears out of nowhere

j) 16-something (30ish? Who the hell knows) English Civil War, Charles I gets executed, Oliver Cromwell turns out to be a tyrant, King is brought back

k) 1670 -> 1776 - ???? Who the hell knows

l) 1770-> 1790something  - Lots of stuff, American Revolution, Captain Cook discovers Australia, French Revolution

m) Early 1800s - Napoleon takes over Europe, gets beaten first by the Ruskis in 1812, then eventually for good at Waterloo

n) Early 1800s -> 1914  - ???? Probably something going on, but not sure what. The American Civil War was in there somewhere, right?

o) 1914->1918 - World War 1

p) 1929 -> 1933 - Depression, Rise of Hitler

q) 1939 -> 1945 - World War 2.

r) 1950ish -> 1969 - Cold War with the Soviets

s) 1969 - Moon Landing, Vietnam War around this period

t) 1969 -> 1989 - More Cold War

u) 1989 - Fall of Berlin Wall, End of Cold War

v) 2001 - 9/11 Attacks, start of War on Terror.


Now, what's hilarious about this is the huge gaping swathes of ignorance in the middle. From World War 1 onwards they have a pretty good understanding, but before that it gets quite patchy. And as soon as you start interrogating our hypothetical British subject about some of the question marks, hilarity ensues as it becomes obvious how clueless they are. For instance:

The entire Byzantine Empire gets just wrapped up as part of the 'Dark Ages'. Who they are or what they did, nobody knows. The Crusades happened somewhere in there too, right? Oh, you mean there were lots of them? And they were fought by some group called 'The Franks'? Who the hell were they, and what happened to them?

I also hear the phrase 'Holy Roman Empire' thrown about from time to time - what was all that about? Is that the same as the Byzantines? They were all Christian, I think, surely they must be basically the same people. Also, what exactly was going on in Europe from about 1700 onwards, other than Napoleon? The Austro-Hungarian Empire must have been in there somewhere (same with the Ottoman Empire), since I heard about them as part of World War 1, but what else they did is anybody's guess.

And this isn't even getting to the question of what was happening the rest of the world, such as Asia or South America. Maybe it's understandable that people stick to their own region. But the Brits don't even seem to know much about Europe!

These questions all have interesting answers - I do know more than our hypothetical educated Brit above, and half the the remarks above are facetious. But it's still embarrassing how little I know about most of this stuff. It's like the timeline of European history is one of those old-world maps that end in obscurity with the phrase 'Here be Dragons'.

It makes you wonder what alternative perspectives you might have on the world if you knew about all these other events in human history.

Thought of the Day

"Better to live under one tyrant a thousand miles away, than a thousand tyrants one mile away."

-Daniel Bliss

Amazon: Supporting Ben Franklin's legacy by making one of two certainties more certain

To paraphrase England's greatest prime minister, commercial partners, like nations, have no permanent allies, only permanent interests.

It used to be the case that Amazon was a fairly reliable partner in helping consumers find the lowest cost purveyors of particular products. Of course, it was only limited to those in their network of people selling through them, but this tended to be pretty liquid. For most products I searched for, there would be a sufficient range of sellers that you'd get decent price competition. This is made easier by the fact that once you're comparing literally the same product, it's basically a commodity market - there's some sorting on reliability of shipping and returns policy, but that's about it.

Amazon always privileged themselves slightly by defaulting to selling the item themselves if they stocked it. But it was simple to click on the tab for 'new' and find a range of sellers sorted by the total cost of the item plus shipping, which was what you paid. Problem solved - buy from the cheapest guy, the end.

In other words, as long as you clicked on the tab, Amazon would make it easy to tell if they were the cheapest provider of the goods or not, and the sorting process made it clear how you could purchase the lowest cost item, even if wasn't from them. Amazon were willing to take the hit to some direct sales (though they got some back in fees from the marketplace seller) for the repeat business that came from running a good price comparison service. 

But starting about a year ago, the interests of consumers and Amazon started to diverge. The reason is that for residents of various states (now up to 12) Amazon has to collect sales tax on their purchases. The citizen was always obliged to pay the tax, at least nominally, but in the past Amazon wasn't involved in collecting it. Collection was meant to occur because citizens would voluntarily report the sale tax on their internet purchases to the state (Ha ha! Stop it, you're killing me!). In practice, this made the Greek Tax office look like a model of perfect enforcement.

The loophole, which doesn't get greatly discussed, is that while Amazon is now forced to collect sales tax for its own providers, and for providers in the same state as the purchaser, it isn't compelled to (and in practice, doesn't) collect sales tax for third party sellers outside the state of the purchaser.

So what would a permanent ally do? 

Simple - he'd now sort purchases on total purchase price of Price + Shipping + Tax. That's the end cost to the consumer, let them find the lowest cost item.

But this was apparently a bridge too far for Amazon. This would put their own offerings at a structural disadvantage, and a decent one at that. In California, for instance, the minimum sales tax at the moment is 7.5%. This article claims that Amazon's after-tax profit margin, for comparison, is 1%. Can you see why playing at a 7.5% disadvantage is a game they're incredibly reluctant to play? 

And so we witnessed the internet commerce equivalent of the Suez Canal Crisis between erstwhile allies. Amazon felt that listing the total price would hurt them so much that they were willing to significantly degrade the usefulness of the price comparison function of their website. So they continue to only list cost in terms of Price + Shipping.

It gives me the absolute $#!7s that I can't sort on total cost any more. The only way to find out is to click through various sellers, add them to the cart, see if tax is added on, remove the item if it is, go back, find another seller, and then compare the tax with the difference in price. 

For small items, I won't always bother. But I will always resent the fact that Amazon is deliberately making my life harder for their own purposes. 

To give them credit, Amazon fought damn hard for a long time to prevent the states from forcing them to pay, but in the end, they saw the writing on the wall. Tax was going to get collected eventually, because the bankrupt states saw them as a cash cow waiting to be milked. Maybe I should cut them some slack.

Or maybe not. There are, after all, no permanent allies in commercial transactions. They happily screwed us when it suited them, so I have no compunction in reducing my business to them in response.

I don't know if it's possible, but if someone figures out how to scrape amazon prices for the lowest total cost, I'll direct all my purchases through them.

The only thing that would be even better would be to be able to scale the weight placed on taxes by a fixed amount. I'd probably set it at about 1.1 for small purchases. In other words, I'd rather pay slightly more money just for the pleasure of depriving the State of California of additional revenue.

That's not going to happen, of course, because Amazon makes it hard to just scrape all their data. So in reality, we consumers just have to bend over and take it.

Marketers love to tell you that the customer is always right, but it's not true.

It sucks to spend so long thinking that your purchasing dollars made you Dwight Eisenhower, only to find out that you were actually Anthony Eden all along and didn't know it.

Briefly

1. Just $10? Why not $50? Now THAT'S a living wage! It's free, after all.

2. Physicists discover that nominal interest rates are indeed positive.

3. It's not quite as good as Garfield Minus Garfield, but Calvin and Hobbes mashed up with Dune is still quite excellent.

Drowning in Words

From a reddit post recently:



Just remember, ignorance of the EU's 26,911 word missive on the sale of cabbage is no excuse!

David Foster Wallace memorably wrote an essay entitled 'Some Remarks on Kafka's Funniness from Which Probably Not Enough Has Been Removed', a title which captured the essence of Kafka perhaps better than anything else that could be said about him.

In both his love of brevity and his appreciation of absurdity, I'm sure the great Mr Kafka would find much of interest in the modern regulatory state.

Postscript: Scholars are still debating the authenticity of the the part in the Dead Sea Scrolls that talks about Christ's '10 Commitments'.

Awesome

Steve Sailer links to this fantastic New Yorker comic:


Ouch! Please report to the burn unit of the hopsital!

This hits so many outrageous buttons at once: 'incisively observing an unusual but true correlation', 'needless withering putdown of other people's dubious choices' and 'old school snobbishness' all in one.

I went through the list of people I knew with tattoos for P(Divorce|Tattoo), and it went 'Yep...Yep... Nope...Yep...'. Okay, what about the other direction, of the non-tattoo folks for P(Divorce | No Tattoo)? 'Nope... Nope... Nope... Yep...Nope... Nope.. .'

Day-amn.

If you, like me, are not particularly enamored of the spreading of this social trend, there are far more eloquently reasoned and interesting critiques of tattooing (for instance, this great Theodore Dalrymple essay), but as Mr Mencken put it, one good horse laugh is worth ten thousand syllogisms

As to why the underlying correlation exists, I think it works on two levels.

One is the treatment effect of traumatic parental events in a child's upbringing. Part of the appeal of tattoos (as far as I can tell) is the notion of their permanence - being able to inscribe something on yourself that will stay fixed, committing an idea or picture to permanent association with yourself. I can imagine that this desire is subconsciously more sought out by people for whom a significant event in their childhood was the disruption and dissolution of the home life they'd thought of as permanent.

The other is the likely heritability of time preference, and compulsive decision-making more generally. I can imagine that the kind of parent who enters into a rash marriage, or decides to have an affair with the secretary or mailman, will (through probably both genes and culture) result in a child who will think less about how the tattoo is going to look when they're 50 with wrinkled skin, or 26 and applying to the law firm.

Still, whatever the reason, I'm mentally filing this one away in the list of life's correlations to bear in mind when one needs to get all Last Psychiatrist in one's analysis of a person.

What Henry Blodget Could Have Written

(Some background - the article that started it all)

"There has been a recent furor over the fact that our CTO, Pax Dickinson, made some remarks on twitter that various people found offensive. I'm not going to summarise them - his twitter feed is publicly available, as far as I know he hasn't deleted or retracted any tweets, so if you're curious about the controversy, I invite to go read his words yourself (in their full context) and make up your own mind.

Rather than talk about the specifics of what Pax wrote, I want to talk about a broader question - whether companies should be in the business of effectively policing the private opinions of their employees.

We at Business Insider are in the market of providing news, opinion and discourse about events in the world today, and we do so in a way which disrupts the broken business model of most old media organisations. This line of work attracts people who are interested in the world around them, and their views will cover the whole spectrum of politics and politeness. Some of them will necessarily be iconoclasts, oddballs, misfits, and brilliant free-thinkers of all sorts of stripes. Interesting, competent people are always welcome at Business Insider.

Within this business, some people are employed as writers - that is, their words and public pronouncements are in fact their work flow, and the basis on which their performance is judged. Other people are employed in other capacities, making sure that the rest of the business operates smoothly.

Pax Dickinson is not employed as a writer at Business Insider, and as such is not employed for either his writing or his private opinions. Pax Dickinson is employed to make sure that the website at Business Insider operates at world-beating standards. Which, in case you're curious, it does. He's done at outstanding job at this, and BI wouldn't be what it is today without his efforts. We didn't hire him for his sexual preference, for his choice of reading material, for his political views, or for his ability to peacefully go along and get along. We hired him for a job, and he did it. He still does it.

From our perspective, that's the end of the story. We are simply not interested in policing the private twitter feeds of our employees to make sure they don't say anything controversial. That's it. To the extent we have an opinion on Pax's twitter feed, it is this: the private affairs of our staff are entirely their own business.

I could tell you that I don't agree with what he wrote. It's certainly tempting - I definitely wouldn't have written it myself. But to do that would be to give credence to the more basic assumption here - that we should take a position on agreeing or not with the political opinions of our staff.

Now, I'm also the CEO of Business Insider, and I have to make sure we have a viable business here. Lots of people are upset with Pax. Many are threatening to boycott our site. Perhaps, for business expediency, I should simply jettison Pax to please the people complaining the loudest.

You all are our customers, and you're entitled to visit or not visit our website according to whatever reasons you wish. That's up to you. We hope you stick around to keep viewing our great reporting. But if you decide you simply can't bear to read a site that employs someone like Pax, we'll sadly accept your verdict. If it turns out that enough people feel that way, then I as a CEO will have a sad choice in front of me, but not a hard one - if it's a choice between 'keep Pax and lose the whole business' or 'fire Pax and keep the business', every CEO in existence will choose the latter.

But before you insist on that course of action, I want to invite you to consider the larger angle here.

We live in a world where the bounds of acceptable discourse shrink ever further by the day. We live in a world where the only people willing to write on the internet under their own name are those who hold the most mild, innocuous milquetoast opinions.

When you choose to boycott a business based on the private views and words of its employees, you are sending a message - we demand ideological conformity from your staff. We demand that you, on our behalf, insist that none of your employees makes controversial statements or jokes that we don't agree with or that we find offensive. We demand that you do this not only for statements made inside your organisation and representing your organisation, but also statements that people make in their own individual capacity in their own free time. We insist that your employment contracts have an effective clause that one should not commit to permanent record any words likely to cause offense to people.

Collectively, you can easily get someone fired for their twitter feed. But there's a catch. You can't just do it for the opinions you disagree with. Because the other side is quickly going to learn the game, and the result will be a narrowing of the discourse all around.

I would ask you, is that really the world you want to live in? If it is, fine - that's what boycotting BI will produce. If enough of you vote with your dollars, that's what you'll get - a world where every single purchasing decision becomes a political decision. Where one cannot buy an icecream or mattress without asking what the political affiliation of its owners are, and what positions they enforce upon their employees.

If you, like me, find that world stifling and invasive, unfit for citizens of a country long praised for its robust discussion of ideas, then you have to check your initial impulse to boycott everything you don't like. You need to accept that there will be people in organisations whose products you buy who hold opinions you don't agree with, and that's okay.

This is not a question of 'free speech', specifically, since there's no government interference going on. You're all free to do what you want. But there's a choice we have to make about how much we as a society want to sanction people for their words alone. We at BI favor a policy that, if in doubt, we're in favor of more expression, not less.

Most corporations simply fold under the pressure of a boycott threat like the one we've received. But we at BI are taking an unusual step today - we're gambling that there's enough people out there who are willing to support Business Insider precisely because it does not police the private views of its employees.

We pledge that when you take a job with us, short of you breaking the law, you can write what you want, under your own name, without fear of being fired.

Imagine that.

Imagine how liberating that sounds.

Imagine if you could do that in your own job, right now.

If that's the world you'd like to see, we hope to continue to see you at Business Insider."

The sad, predictable reality is here.

Trauermusik

In January 1936, King George V was in seriously declining health. He had suffered from pleurisy and pulmonary disease for a number of years, and it had become apparent to his doctors that the end was near. (So much so that his doctor, Lord Dawson of Penn, on January 20th took the step of announcing that "the King's life is moving peacefully towards its close."). The King died on the night of January 20th, apparently hastened by a lethal injection of cocaine and morphine from his doctor.

At the time, German composer Paul Hindemith was in London, and meant to be performing the next night the English premiere of a viola concerto he had written, 'Der Schwanendreher'. With the death of the King, the concert was cancelled. The BBC, however, decided that they wanted Hindemith to be involved with the musical choice for the occasion of the King's death.

After debating that morning about what to perform, eventually it was decided that Hindemith should write something new for the occasion. And so, between 11am and 5pm on January 21st, he did, and it was performed live that evening in a radio broadcast. The result is the beautiful 'Trauermusik' ('mourning music', or 'funeral music'). The strange combination of tonality (giving a clear melody) but non-diatonic structure (giving the non-standard chord progressions) give a sense of sadness and complexity that seems appropriate for the death of a monarch of over 25 years reign.



This beautiful piece was written in six hours. 

Trauermusik for the King.

Trauermusik for the Empire.

Trauermusik for the age when a dignified and solemn British public mourned their departed monarch by listening to classical music on the radio.

I only read it for the articles

Specifically, the obituaries.

The 'it' here is The Economist. Their obituary section, on the last page of the magazine, is far and away the most interesting part of the whole publication, and the part I always turn to first. It's not uncommon that this will be the only bit I actually read.

The reason it's so remarkable is that it pulls off an incredibly difficult feat - surveying a person's life in a way that manages to be respectful but even-handed. This is a fine line to walk - one does not wish to speak ill of the dead, but an obsequious hagiography will simply make for dreary and implausible reading. Consider their obituary for Osama Bin Laden if you want to see them take on an extraordinarily challenging subject for which to pull off this feat.

Most interestingly, they choose their subjects in a way that gives you insight into some or other aspect of society, while still being focused on the person in question.

For an example of a thoroughly unorthodox but excellent piece, look at their recent obituary for Elmore Leonard. Can you think of any other magazine that would publish something like that?

It left me glad I renewed my subscription recently after a long absence.

Then, of course, I flip to the front of the magazine and find masterpieces of grimly comic absurdity, such as endorsing Kevin Rudd in the Australian election. The role of Rudd's earlier 'liberal' policies towards asylum seekers feature several times in their reasoning. Personally, I would have thought that a magazine calling itself 'The Economist' might be able to give some nominal recognition to the fact that thousands of extra boat people have drowned as a result of responding to the incentives of this 'liberal' regime in an entirely predicable and obvious fashion. The dig at Abbott about homosexuality is particularly comical, given that Kevin Rudd's support of gay marriage dates all the way back to ... May this year. Now that's conviction! That, and praising Labor for passing a carbon tax with a price of carbon set at 3 times the world market price. Adam Smith would be proud.

And I get reminded of why I gave up my subscription in the first place.

The one phrase you probably haven't heard being thrown about much in the debate on whether to intervene in Syria.

"Libya".

So, we want to topple a nasty secular dictator we know, who is locked in a struggle with Al Qaeda-linked terrorist 'rebels', confident that we'll manage to turn the place into Switzerland.

How'd that work out last time? Not so hot, as I wrote about at the time.

How's it going now? You've stopped hearing about it, but that's just because the west has a short attention span.

From a randomly-chosen item in the first couple of hits when I type 'news Libya' into google:

"We all thought Libya had moved on – it has, but into lawlessness and ruin"

Libya has plunged unnoticed into its worst political and economic crisis since the defeat of Gaddafi

A little under two years ago, Philip Hammond, the Defence Secretary, urged British businessmen to begin “packing their suitcases” and to fly to Libya to share in the reconstruction of the country and exploit an anticipated boom in natural resources.

Yet now Libya has almost entirely stopped producing oil as the government loses control of much of the country to militia fighters.

Well that's just grand.

No, really, things will work out much better this time. Trust us! From the producers who brought you 'The Arab Spring'.

Fortunately, common sense seems to be slowly breaking out this time around.

It started in Britain:

British Prime Minister David Cameron loses parliamentary vote on Syrian military strike

 But now it's catching on everywhere:

TONY Abbott: We’ve got a civil war going on in that benighted country between two pretty unsavoury sides. It’s not goodies versus baddies, it’s baddies versus baddies. And that is why it is very important that we don’t make a very difficult situation worse.

Look, the phrase 'baddies versus baddies' is definitely infelicitous, but the sentiment is certainly correct. (You could probably paste the same quote into most internal conflicts in the Middle East, if not most conflicts in the Middle East more generally). I personally prefer the Kissinger restatement of the same view about the Iran/Iraq war - 'It's a shame they can't both lose'.

Still, better crudely phrased realism than naive dross about dreams of freedom that winds up with thousands more in body bags.

When I said it's catching on everywhere, you can always rely on some people to refute the 'everywhere' part:

Sweden on Tuesday became the first European Union country to announce it will give asylum to all Syrian refugees who apply.

“All Syrian asylum seekers who apply for asylum in Sweden will get it,” Annie Hoernblad, the spokesperson for Sweden’s migration agency, told AFP.

Ha ha ha! "All"?

I don't think you've thought this through.

Rent-Seeking vs. Rent-Collecting

When historians of the future are writing the epitaph for the west, I imagine that one of the characteristics that will strike them about the present age is the increasing prevalence of rent-seeking.

As the government inexorably expands in size and scope, it becomes more of a suckers game to simply outcompete the opposition, and more lucrative to lobby the government to have them shut down.

This might take any number of forms - ludicrous licensing requirements that lower supply, absurd restrictions on competitor firms, tax breaks for your particular boondoggle industry - whatever works.

If you want a list of some of the more outlandish ones, browse through the cases the Institute For Justice has fought over the years. It's a Sisyphean task, alright.

The strange thing, though, is that most people profess to hate rent-seeking. So how come we end up with so much of it?

Part of this is simply political economy. A small but organised group fighting for a large benefit will often out-lobby a large dispersed group (e.g. taxpayers, consumers) who each suffer a small harm.

Part of it is just rank hypocrisy - when other companies lobby for their licensing requirements, it's just to squelch consumers, but I'm deeply worried about customers not getting their hair braided correctly.

Nobody is the villain in their own narrative, after all.

But I don't think that's all of it.

I think that to really understand the extent of rent-seeking, you need to appreciate those who enable them - the rent-collectors.

The way I would characterise it is that rent-seeking, properly defined, is about lobbying for socially inefficient laws and regulations that will benefit you privately.  The trial lawyers lobby turns up to argue that we really truly ruly need to have a legal system where the loser doesn't pay the other side's costs, for instance.

Rent-collecting on the other hand, is what happens when a party simply takes advantage of a bad law that is already on the books. Unlike the rent-seeker, the rent-collector does not actively push for socially inefficient legislation. Instead, he simply takes the inefficient law as he finds it - somebody is going to get the rents due to the bad law, and it may as well be me.

These are the much wider circle of folks who are thus corrupted by the process - their own self-interest stops them agitating for a repeal of the bad laws, but their lack of involvement in the initial setup means that their consciences are clean.

For every community organiser who gets a cushy job on the rent-control board, there are hundreds of tenants getting a few hundred bucks a month for free from their landlord.

For every creep in the restaurant lobby fighting to outlaw food trucks, there are hundreds of restaurant proprietors vaguely relieved to not have a truck parked nearby.

And sometimes, the rent-collectors (at least indirectly) will be people who in other circumstances would be the first ones to crusade against rent-seeking.

American securities class action lawsuits are like something out of a Kafka novel. The shareholders of a company collectively own the company. Suppose the company makes some screwup and causes the share price to drop. Based on the fact that the company is a separate legal entity, some lawyer and a gold-digging lead plaintiff will file suit on behalf of the shareholders against the management of the company that they themselves own. The management is of course protected by the company, so money is coming out of the company coffers (which the shareholders own) to nominally compensate the shareholders of the company. Got that? Well, actually, the current shareholders (who don't owe an actual duty to anybody) are indirectly paying money to the old shareholders (who often overlap substantially with the current shareholders). In theory, anyway. Part of the money is coming from insurance companies who write the professional indemnity insurance for the directors, but the company is going to be paying that back in higher premiums in no time flat. You can rest assured that the only people making any money off the whole farce are the lawyers.

Or are they? Who else benefits from this ridiculous charade?

A lot of the time, it's economic consulting firms. They make a decent living defending companies against these lawsuits, and showing that the damages aren't as high as the often ludicrous plaintiff's claims make out to be. These are some of the most free market types you can imagine, with economics degrees from the best universities.

Don't get me wrong, in the scheme of this whole monstrosity, these guys are far and away the most defensible. They're fighting for good guys, so to speak.

But still - how many of them would be out there lobbying to get securities class action reform to eliminate all this absurd waste? How many of them would honestly greet such reform with the same zeal that they would if it happened in any other industry? Even if it put them out of a job?

To ask these questions is to know the answers.

When despotic regimes take prisoners of war, one of the things they often try to get the captives to do is to write out statements that are disloyal to their home country. Sooner or later, cognitive dissonance takes over - the things you wrote down that you originally didn't believe, you come to believe, because you subconsciously prefer this view to the alternative that you wrote cowardly and disloyal things rather than face punishment. The extreme form of the result is Stockholm Syndrome. There's a reason that making disloyal statements is punished as a serious offense.

The reality is that behind every rent-seeking lobbyist are thousands of rent-collecting regular joes who have convinced themselves either that a) the current regime is either downright sensible, or b) at a minimum, it's terribly unfortunate but there's really nothing to be done, old chap.

Thus are the sheep corrupted to be complicit in their own fleecing. They'd all acknowledge that, sure, this is just robbing Peter to pay Paul. They'd further acknowledge that, sure, everyone here thinks they're Paul, and sure, they can't all be right. But still, when all's said and done, I really will be Paul, and that's all that matters, right?

Briefly

A sad but sweet comic from SMBC.

Brave Zack Weiner! That was drawing! Good alike at grave and gay!

How to tell if a coffee shop serves good coffee, part 2...

Without drinking it, obviously.

This is continuing in the 'news you can use' category, among the trivialities that have been occupying my life of late while the events of the world pass me by.

I used to go with the smallest cup size offered by the cafe. There's a tendency among bad coffee shops to serve you up enormous bathtubs full of bilge water. Of course, to get a larger cup of coffee, they simply run the water through the same set of grounds until it turns into a burnt mess. The places that offer you a small sized coffee are more likely to know what they're doing.

But this was superseded by a tip from AL - the number of milk jugs on display. Good places will never heat their milk more than once. As a result, they tend to have a lot of small milk jugs around. If you see that, it's very likely somewhere that knows what they're doing. On the other hand, I've never had a good coffee from a place that had a single giant milk jug that kept being reheated.

If the place is failing the above signals and you still need a coffee, at a minimum order the smallest size you can.

(For the previous best signal, see here)

Short Answer Exam Technique

If confronted with an exam question of the following form:

"Two friends are having a discussion. Simon say that [ABC]. Sally, on the other hand, claims that [XYZ]. Who do you agree with? Why?"

and you are unsure of the answer, assume that the female is right. Social rules in exams follow television ads - in a mixed sex group, the man is almost always depicted as the stupid one. This is the mirror image of the default assumption in TV ads in the 50's and 60's, where the silly housewife was the staple reason why you should buy a given product, and society seems to have been furiously overcompensating ever since.

There's another similar rule on TV - in a mixed race group of males, the white guy is depicted as the stupid one. The latter case oddly doesn't seem to feature as commonly in exams, as Marmeduke isn't frequently in discussion with Jamal. But if he were, I'd bet that way too.

Truancy, etc.

I have been rather tardy with this particular web diary of late. As usual, a lack of posts either means that my life has gotten a lot less fun or a lot more fun.

Thankfully, in this case it's the latter, as part of an extended holiday/general goofing off. So as between my two readers and myself, there's been a conservation of total utility, rather than a pareto loss.

The Wackiness of Hotel Pricing

As far as I can hotel, there are only two possible prices for services at a hotel:

a) 5 times market price, or

b) Free.

And that's it. Nothing is charged at market pricing, and nothing is charged at marginal cost either. It's just cross-subsidisation up the wazoo.

To make things weirder, the list of which stuff goes into the 'free' category and which stuff goes into the 'massively expensive' category seems to vary widely from hotel to hotel.

In some places, internet is free. In others, it's $15 a day. Breakfast is either complimentary, or $30. Parking is either free or $30 per night. The fitness centre is either free or $20 per day. etc.

Personally, I'd gladly trade the crappy hotel room coffee and widescreen TV (both nearly always complimentary) for free internet, but of course that option isn't on offer.

When wifi first became a thing, I was very much hoping that it would be put in the 'TV' category of 'essential services that every room gets gratis'. This battle for social norms seems to be ongoing, currently in the trench warfare stage where neither side is making any particular progress.

A lot of this seems to be just weird mental accounting and salience. Some places now charge a single, mandatory 'resort fee' to cover all the incidentals. Of course, if it's a mandatory fee, you could just add it to the cost of the room and make it all truly free. My only guess as to what's going on here is that this is a ruse to fool price comparison websites into displaying a lower price than the total value.

For all the IO models we have, sometimes it just seems like the best working model is 'companies fool around with pricing and charge as much as they think they can get away with'. This is probably a crude version of some of the IO models, like the Gabaix and Laibson model.

Pricing is weird.

With the evening set out against the sky...

How strange it is to be in the twilight of one's youth!

To gaze around and reflect on the set of choices you made (whether deliberately, accidentally, or some combination of both) that now see you still out in the fading embers of the sunset.

By now, most of your peers have gone inside and given up skylarking for the day, and are busy preparing dinner, stoking the home fires, and other such responsible things.

In a few short hours, night will have set in in earnest, and it will be cold and inhospitable to be out here alone.

But in the meantime, the sky is a brilliant orange. The sun still bathes the world in a glorious light, but without the same heat as before.

Let us stay and linger here just a little longer...

The most interesting data set I've seen in ages

The age old question, as most readers of this august diary will know, is the following:

Do you know what it takes to sell real estate?

The answer, of course, is that it takes brass balls to sell real estate.

A few years ago, Heartiste talked about the Apocalypse opener in picking up women. This was taken from Ciaran at Bristol Lair, and proceeds as follows:

You rock up to a chick and, in a confident, level voice you say

“Hey, how’s it going.”

She will say

“Fine.”

You then say

“Cool. What are you doing later?”

She will say

“I’m not sure.”

You then say

“Do you want to come home with me?”

Then you hold.
Hold.
HOLD………………..
HOLD IT MY SON……………………..
HOLD THE F***ING LINE………………

Boom. Makeout.

And that’s the Apocalypse opener. You don’t ‘build rapport.’ You don’t ‘elicit values.’ You don’t ‘kino escalate.’ You don’t even ask her fucking NAME. You ask if she wants to sleep with you in the THIRD SENTENCE, hold the line, and reap the whirlwind.

Yowser.

That my friends, is some serious real estate transacting right there.

The second, more interesting part, is Ciaran's analysis of how to make the thing work:

The key to making it work is not how you say it, but what you do in the 30 seconds after it’s left your mouth.

Before I talk specifics, let’s state the single CARDINAL SIN of the Apocalypse, which is the ONLY THING that can blow you out.

NEVER BE WEIRD

That’s it. Don’t be weird. You have to deliver the opener deadpan. Like you are talking about the WEATHER. You are not making a BIG THING of it. You’re just ASKING.
You are not MOCKING. You are not JOKING. You are not TOO SERIOUS.

It is NOT PLAYFUL however – it is REAL.

You are REALLY ASKING HER.

If she says no – you only need ONE COMEBACK.

It is this:

“Ok.”

Then you strike up a ‘normal’ conversation about the colour of the wallpaper, or the music that’s playing, or the fact that you did your laundry earlier today.

Whatever.

In other words, the reason it works is not because girls have a desire to go home with any guy that asks. Rather, the reason is that it takes some sizable cojones to deliver this deadpan, and not lose your nerve. To the extent that it may work at all, it's that you definitely show yourself as being unusually self-confident. As long as you don't come across as autistic or a sociopath, this is a clear plus.

The question is, of course, how well does it work? Or more realistically, does it work at all?

Some guy decided to test it out. A hundred times. And what are the results?



The standard comments over at Reddit are pointing out that none of the girls say yes. This is the dog bites man aspect.

But I think it misses the much larger man bites dog story here.

Don't ask how many girls would sleep with him. Ask how many girls stick around, laugh, and don't run away immediately. And bear in mind that this guy guy has several handicaps relative to the stated method, namely:
-He isn't doing the crucial conversational follow up.
-He's doing it often on groups of girls, or guys with girls, both of whom are WAY less likely to be seen to say yes in front of their friends
-He's doing it in broad daylight
-He's doing it in girls who are stone cold sober, and whom are unlikely to be looking to score.

Because if you believe the stated explanation, if you did this in a better setting and kept up the conversation afterwards and sounded mostly normal, would they continue to respond positively?

So how does that metric work?

Look at girl number 6. Look at the way she continues to linger and smile at him after saying no.

Look at girl number 8. She laughs and says 'maybe, I don't know. Perhaps?'

Think about that for a second. Think about it and try to tell me that the real story here is that the guy didn't get a concrete yes immediately.

Number 21, in a group of two, says that he's made their day.

Number 44 says, 'Um no. I mean, you're attractive, I'd probably make out with you.'

More to the point, look at all 100, and count how many responded angrily. The answer is one. One out of a hundred throws a drink at him. Be honest, would you have estimated only a 1% rate of angry retaliation? Because I sure wouldn't. How many guys could claim that their opening line elicited at least a smile and a laugh in 50% of cases?

Again, the unsurprising part is that this doesn't work as implemented.

The remarkable part is how positive the overall response is. Bemused, sure. But positive.

This guy has a bright future ahead of him in the real estate sales business.